It’s worth following Fabian Picardo on Twitter. He enthusiastically supported this tweet, below, today and another on plastics earlier in the week. The Gib deal is really key to MWG as it bridges the revenue gap created by the disposal of Monitoring.
If Picardo is getting on the environmental waggon then that’s good for Gib and good for MWG....
I had thought the best option was to close membrane and back monitoring. However, this CEO, with skin in the game, clearly has deep conviction that the membrane IP is world class and will be adopted worldwide - eventually. If he’s right then MWG stock is an easy 20x. It really is that binary....
“Marine litter awareness @gib bathing pavilion. Beaches to follow ????#beatmarinepollution #wecare @GibraltarGov @cortes_john @FabianPicardo
Meanwhile, away from the share trading confusion, the operational news is quietly impressive. Take a read of this:
From the Nouryon twitter feed this morning:
#Didyouknow our readily biodegradable chelates are an essential ingredient when it comes to effectively removing the most stubborn stains while treading gently on the environment? Our #Dissolvine chelates can make a difference in everyday dishwashing.?? bit.ly/2YAhLfC
this is why I think there's a good recovery angle to this stock. the membrane-related companies are limited subsidiaries. So, even in a worse-case and there's no bid for assets (intellectual property, etc) out of administration (which I consider unlikely), I think the monitoring business with its £4mn of growing US$ sales is ring-fenced and supports a far higher valuation than the current one. I also think the Gib contract is ring-fenced, too. But let's see if that ever gets over the line. If Gib is cancelled, there will be considerable project costs that will be rebated to Modern Water.
"As a matter of English law, a parent entity (domestic or foreign) of a limited company cannot be held liable for the debts of that subsidiary upon its insolvency unless it has contractually agreed to accept such liability."
final point. the thing that keeps me here - and always will do so whilst he's involved - is Clive Dix. He's a world class biotech guy and he's made some spectacular exits in the past. as they say on the west coast - back the jockey, not the horse. good luck all.
I think the seller is Aquarius...It has funds for high net worth individuals and has to return cash at the end of the life of some of its venture funds. I think Aquarius has had no choice but to be a partial seller of their position. It means nothing about the potential of the company or Aquarius's view of it.
As for recent newsflow...they've been quiet to be sure. Not much point making positive noise until the seller is finished because the share price gain overturned by the increased sell pressure. I think we will hear more when the seller is done. I also suspect that there's some M&A. When you look at ETX and C4X and some of the other discovery plays at such distressed valuations, it seems to make sense to pool expertise and relationships with big pharma and discovery targets to create something that the market can value more readily.
agreed. also, i think the timing is significant. I don't think the company would release the statement if there was a major overhang of stock that had to be placed because it would be a wasted bullet....I'm hoping the issue of this RNS implies the management is happy that the register is now stable and that they can now build up the newsflow in their story.
Not going to argue that this has been a good ride. Leaving the history to one side, the monitoring biz is b/e at least, whilst Gib is a deep out of the money call option I’d prefer to have than not. That leaves membrane.... it’s been a prob from the start. It’s technically impressive but the ultimate conclusion is that a tiny player with no balance sheet or connections cannot break into perhaps the longest cycle business sector there is - water infrastructure. Will the likes of suez or veolia be interested in it? I think so. IF it can generate some value to offset the debt facility is has consumed (<£1mn), then I’m very happy to buy the monitoring biz at 0.5x sales with the Gib option in for free.
am pleased with this RNS. it ring-fences the two parts of the business with real value - Gib (contract size - £23mn, and the fast growing monitoring business with circa £4mn of sales.). ...There's no reason why the market can't put 2/3x sales on the monitoring division valuation alone, once it has thrown off the yoke of the membrane business costs. Gib has always been and remains, the wild-card capable of putting us in the high teens if not 20's. Well done, management for (finally) gripping it. Good luck with the next stage.
Agreed. You won’t go far wrong at 130p. Just waiting for the Woodford RNS...feels like it’s close. There are decent sized tickets going through most days at the moment..... I then expect a reflexive move back up to 170p+....
I don't see a funding. I see a break-up of the group. They've tried a funding round at 5p to extend the runway but that didn't work. The problem then is the problem now - membrane isn't winning any orders and its burning cash the company hasn't got. the key questions are: is the membrane technology and patent portfolio worth anything? who would buy them if the company walked away from membrane? how much debt/loan-repayment would that leave the monitoring business to carry? how do shareholders retain exposure to gibraltar - if/when it comes through ?
the worst-case scenario is a heavy write-down of membrane. but can it be worthless? it feels like it should/could be worth something to an industry specialist. In any other scenarios, I think things could surprise to upside. I think monitoring is a great little business, growing well and fast with the Dow connection and an expanding chinese footprint. Gib - we can't see the contract but if there's a break because the politicians cannot transact, then Modern Water will be due compensation. But it feels like it will happen - it has to happen after promises from government/first minister....
thanks, useful update.
we're actually very early in the nouryon commercial uptake phase...their global sales people have only had the itaconix product to sell-on for a few months. there's a real risk that this accelerates as each quarter goes on. We could really see an aggressive J curve....
Perhaps most importantly, the vast majority of the orders will become repeat business, so that the sales growth really compounds higher and will do so for years....
thanks, Bio. agreed. it's a great stock at these levels with a cap raise out of the way...we've just got to see the back of Oceanwood, who seem to be the seller. Only another 3% or less to go.
that's a rational approach. I accept and respect that...
I also think buying a few shares with money that you can afford to lose is rational here, too. We all know that if they can find a non/marginally dilutive way out of this, then it's going to be up a long, long way.... It's always about risk vs reward on AIM - calculating the probability of a positive outcome vs the anticipated potential gain to scale the bet you put on.
i actually thought their financing plan was very reasonable - with limited dilution for existing holder and sufficient room to allow them, if things go ok, to get through to the other side and b/e. I think you're under-estimating just how difficult it is to get any funding in place when your UK innovation space is in a bear market, your main shareholder is a seller out of choice/necessity and your share price has fallen for the last three years. Under those conditions, I think this excellent management team did a really good job and if you can tell me how they could have funded better, I'd love to hear it.
Sure, lots of execution risks ahead in a highly competitive market but it was a decent bet at 6p and it's an even better one at 4...
nor me...it's a 'reflexive' move...either someone has stopped (temp or permanently?) selling, or someone is closing a CFD short on a friday ahead of the summer...
my main worry here is that someone will bid for it and take it out in the single digits, when we and the management deserve so much more after years of hard-work/losses/frustration.
I think I know just how important today’s RNS is.... I’m delighted for the management team.
Of course, the day traders have overlooked us, but that’s no bad thing.
We’ve got a bucket load of cash, some compelling next generation environmental solutions for the paints and coatings industry, and some strong commercial relationships.
I think the questions we should be asking is ‘who is going to bid for us?’, and ‘will we be sold too cheap?’.
Paints & coatings is a globally consolidating sub sector. We are firmly on the radar of the big guys now we can deliver water-based solutions for industrial applications.
I really wouldn't be too disappointed if we don't see an RNS on trial progress. It's very likely that the company is in detailed licensing discussions with US pharma and others. They may even be in prelim discussions for a strategic investment - or even an outright bid. The point being that the management are under a lot of pressure on multiple fronts - delivering the RP clinical outcomes, the stroke protocols and recruitment, managing the new relationship with the chinese, etc. etc etc. Communication with the market is actually a lowish priority for the moment. And if they're in confidential discussions, there won't be a lot they're able to say anyhow.
We haven't heard any bad news re RP - which is great. Best strategy is to try to be patient and sit tight. They'll let us know what's going on as soon as they're ready and able.
Still feels like this really can go a long, long way higher in time. Good luck all.